African Review of Economics and Finance

The African Review of Economics and Finance (AREF) is the official journal of the African Finance and Economics Consult (AFEC). The Journal acknowledges that the word 'economic' is plural and all economies are positioned, situated, and embedded in particular societies. Therefore, how the economy is studied must necessarily be plural. From this perspective, the journal welcomes high quality articles in theoretical and empirical economics, be they orthodox, heterodox, or economics as an interdisciplinary social science, with special emphasis on African economies and/or how they relate to other economies in Africa or the rest of the world. There is no limit on the topics of interest. Contributions can be either innovation in economic theory or rigorous new applications of existing theory in areas such as behavioral economics and decision theory, game theory, general equilibrium theory, contract theory, public finance, financial economics, industrial organisation, labour economics, political economy of development, urban and regional political economy, and agrarian political economy.

Latest Articles

Despite the spate of urbanisation fuelled among other factors by rural-urban migration across the African region, majority of people continue to reside in rural communities with greater burden of poverty and livelihood vulnerabilities. Ghana's case has not been different. However, in response to the high incidence of rural poverty, the seasonal nature of agricultural livelihoods and the attendant increase of unemployed youth engaged in rural-urban drift, successive governments of Ghana introduced and supported the Rural Enterprise Programme (REP) to promote livelihood diversification and restructuring of the rural economy. The REP phases I (1995-2002) and II (2003-2011) sought to contribute to the development of competitive rural medium and small-scale enterprises (MSEs) in beneficiary districts backed by good quality, relevant, sustainable and market-driven business development support services. For almost two decades of implementation, the REP has run on policy assumption that, focusing on direct agricultural activities alone cannot produce substantial rural poverty reduction and support the actualisation of the sustainable development goals (SDGs) in rural Ghana. However, performance of the REP on its assumption requires verification. Following mixed research techniques, this paper uses the experiences of selected beneficiary communities from the Ajumako-Enyan-Essiam District to examine how the alternative livelihood development interventions of the REP have impacted rural livelihoods and poverty. The extent to which rural enterprise development interventions have engendered livelihood diversification and affected the asset-base of rural households, and how the interventions have produced positive livelihood outcomes and poverty reduction in the intervention area studied are discussed in this paper.

The study examines the degree of regional and global integration of 11 African Stock Markets (ASMs) using monthly return series from 1997 to 2015. It tests for the existence of structural breaks and whether any detected significant break in the regional and global degrees of integration caused an increase or decrease in segmentation. Additionally, the study examines the impact of the 2008 Global Financial Crisis (GFC) on the regional and global integration of the ASMs. Evidence is provided that suggests: (i) a time-varying regional and global integration of the ASMs; and (ii) that global integration dominates regional integration for all of the ASMs. The ASMs are more globally integrated, relative to their degrees of regional integration. Significant structural breaks are detected, which for most countries are associated with an increase in the degree of integration and for others a decrease in the degree of integration. Most of the observed structural breakpoints in the degree of global integration correspond with the GFC; however, the structural shifts in regional integration are largely unrelated to the GFC. The evidence shows that geographic proximity may have minimal impact on market integration unless there is an associated regional economic integration. Regional diversification benefits may thus exceed that of global diversification and vice versa depending on the extent and direction of economic activities of the economies of the geographic region.

This study aims at answering two questions: Do women have the same determinants of Internet adoption as men? Do they adopt it for the same uses? The answers are mainly positive. However, in the adoption decision, women are different from men mainly due to the negative effects of age and unemployment; these effects being positive for men. Moreover, women have a relatively lesser intensity of use. Age remains a hindering factor while high computer skills and high frequency of computer use improves the intensity of Internet use. This recommends homogeneous policies while especially encouraging young women to use ICT and not to drop out as they grow in age.

This paper investigates the ways in which linkages between the informal and formal segments of an economy may yield benefits to or impose costs upon informal workers, based on views of informal traders in Accra regarding their relationships with the formal economy and its institutions. The data are drawn from the Informal Economy Monitoring Study (IEMS), with a World Bank study of informal household enterprises providing context for the IEMS-Ghana study and a basis for interpretation of its findings. Data from 15 focus groups and a survey of 150 traders from both central and non-central locations of Accra, Ghana, are analysed in terms of traders' relationship to the value chain, non-government institutions, government and the macroeconomy. The last two are found to exert a strong, mostly negative influence on informal operators, offset to some extent by support from member-based organizations and non-governmental organisations (NGOs). Access to loans from microfinance institutions was an important influence on traders' work and was viewed both positively and negatively. Although there are few visible direct linkages between informal operators and formal firms, they are to some extent mutually interdependent as retailers and suppliers in the value chain. Taking advantage of the potential synergy in informal-formal linkages will require government and other actors to become more proactive in facilitating, rather than denying, infrastructure, support services and adequate space for informal traders. The probability of such an outcome depends on the ability of informal traders to organise themselves.

Post-conflict societies, such as South Sudan are characterised by weak regulatory frameworks and lack of political will to implement much needed reforms. This often impacts directly on the economy. The legal, social and financial environment is also weakened in the process, leading to the demise of key economic drivers. The small and medium enterprise (SME) sector is critical for the growth of nascent economies such as South Sudan's. The effectiveness of SMEs as key economic drivers is amongst other things dependent on their access to credit. With only a few SME-specific credit facilities in South Sudan at the moment, it is important that these institutions adopt funding models that will suit the poor, most of whom do not have collateral and credit history. Group lending appears as a suitable model for the poor. The success of this mode of SME funding in selected jurisdictions, namely Angola, Bangladesh, Bolivia, Burundi, and Colombia underscores such a position. The socio-economic, legal and political environment of the three jurisdictions studied in this paper where group lending has been successful closely mirror that of South Sudan. The dynamics of group lending will, therefore, likely suit the needs of South Sudan. Hence it is suggested as one solution to uplifting the small business sector of Africa's newest country, although attention must also be given to other critical development factors such as a sound regulatory regime, an effective taxation system and access to credit.

The quest to gain market share within an industry is argued to drive Decision Making Units (DMUs) to accommodate more risk. The cross sectional variations in risk-taking is believed to be influenced by the position of the DMU in the industry, with those on the lower end assuming more risk in order to gain market share. On the other hand, less competition among banks could result in higher interest rates being charged on business loans, which might raise the credit risk of borrowers as a result of moral hazard issues. The South African highly concentrated banking sector presents an opportunity to econometrically investigate such issues. Panel estimation techniques are employed on the South African banking sector unique data set. The model explores the relationship between the speciï¬?ed bank risk measure and bank market concentration measure, controlling for individual bank characteristics and the state of the economy. We find that smaller banks in the South African concentrated banking sector are more exposed to credit risk than bigger banks. However, considering the interaction between size and concentration measure, bigger banks in a highly concentrated industry are more likely to have high credit risk, in line with the concentration fragility hypothesis. Findings have implications for both policy and management of individual banks.